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Merrill Survey finds investors optimistic

19 March 2009 12:16 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. For the first time in more than three years, investors arenâ€™t expecting lower global growth over the next 12 months, according to the latest Merrill Lynch Fund Manager Survey. However, they remain wary of bank stocks, with 48% of managers saying they were underweight on banks this month compared to 39% last month.

Banc of America Securities/Merrill Lynch Research interviewed 213 fund managers, overseeing a total of $533 billion in assets, for its global survey between March 6 and March 12.

Despite their belief that the global economy will improve over the next 12 months, managers have continued to reduce their equity holdings and increase their cash and fixed income investments. Forty-one percent of respondents said they were underweight on equities, up from 34% last month. This wasnâ€™t helped by the fact that world equities plummeted 15.5% during the days that the survey took place. On the other hand, 26% of managers surveyed said they were overweight on bonds, a sharp increase from 7% last month.

However, there were also some bright spots. In addition to the improved global outlook, the survey found a renewed optimism for Chinaâ€™s economy, with just 1% of respondents saying that Chinaâ€™s economy would worsen in the year ahead, versus 70% who predicted a worsening outlook for China just two months ago. In addition, 42% of managers believe that equities are undervalued, compared to just 24% last month. Still, managers remain pessimistic on the prospects for the eurozone and Japan, with 40% underweight eurozone equities and 39% underweight on Japanese equities.
â€œMarchâ€™s survey shows signs that investors want to believe in an economic recovery. However, caution on banks is firmly capping risk appetite,â€ said Gary Baker, co-head of investment strategy at Banc of America Securities/Merrill Lynch, in a statement.